No bottom yet, ULI panel says 

There was a quiz at the end of a real estate forum in Boise this morning.

It had only one question: Have we seen the bottom of the market?

Correct answer: No.

The outlook for 2010 is “mostly doom and gloom,” said the Urban Land Institute’s Senior Vice President Dean Schwanke. Local panelists acknowledged the difficult road ahead as well.

Because equity is low in commercial building loans, refinancing has become difficult, and demand for space is still low. Available debt capital is limited, and will remain that way until someone figures out how to fix the commercial mortgage-backed securities market. 

Schwanke said he expects a surge in foreclosures, give-backs and workouts, with delinquencies rising to up to 7 percent of total inventory in 2010.

So for real estate developers, his advice was to write off the year and dream about the future.

“Don’t develop anything,” he said. “You’ll be better off than if you do.”

Schwanke’s remarks at the conference discussing the ULI and PricewaterhouseCoopers 2010 publication, Emerging Trends in Real Estate, were followed by a local panel. The local experts included Robert Phillips of Boise-based Hawkins Co., Jim Hunter of Boise Hunter Homes, Jerry Dunn of A10 Capital and Don Dietrich of the Idaho Department of Commerce.

The panel was moderated by Rob Perez, president and CEO of Western Capital Bank, Boise.

Dunn said he’d thought 2009 would be the year the dam broke and commercial real estate loans started defaulting left and right, but he was wrong.

“We’re seeing dribbles start to come over the dam,” he said, “but next year we could see more capitulation.”

The event was held at the Grove Hotel in Boise.

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